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GW Sales Drop 20%; Stocks Drop 15%
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Old 16 Jan 2006, 04:09   #1 (permalink)
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Default GW Sales Drop 20%; Stocks Drop 15%

Straight from http://www.gamingreport.com/article.php?sid=19847 we know that GW Sales are dropping.

The article states:


Games Workshop Damon White Reports: Following the below public statement regarding the negative first half of their fiscal year, Games Workshop Group's publically traded UK stock slid Friday 56 to 319(-14.93%). Games Workshop's Chairman and Chief Executive blamed the decline on the deflation of the Lord of the Rings "bubble" and U.S. Independent Hobby Stores.

T H F Kirby, the Chairman and Chief Executive, had this to say in the Games Workshop statment:

"As first reported last year, our business continues to experience the downside of a trading cycle as the Lord of the Rings 'bubble' deflates. This has continued throughout 2005 to date, resulting in a 20% decline in sales in the first half against the previous year. The decline has been largely consistent across all of our markets and has been slightly more severe than originally expected.

The position has been exacerbated by the continued reduction in our sales to independent toy and hobby retailers, notably in the US, where many smaller independent operators are ceasing to trade. We have sought to mitigate the impact of these difficult conditions by working closely with stronger outlets to nurse them through their current problems and by generating healthier performances from our own Hobby stores.

Our emphasis has been to focus on the development of our own Hobby stores and on investing in recruitment and also in structured training at all levels of management and staff. We are strengthening all direct channels to market.

Despite lower production volumes and the consequent reductions in the benefits of scale, gross margins at 69.1% are higher than our original expectations and only slightly short of the comparative first half in 2005 (70.5%). Greater operational efficiency from the capital investments at Memphis and Nottingham (all completed on time and on budget), and sourcing bought in components and print more cost effectively from both Europe and Asia, have further helped to mitigate the effects of lower volume.

Additionally, overheads have been reduced from £42.2m last year to £39.0m this first half after absorbing the cost of making the reductions, whilst increasing our expenditure on customer facing activities including 17 new store openings since November 2004.

Our sales for the five weeks to 1 January 2006 show a year on year decline of 17%. We can now see that our full year sales, and therefore profits, are likely to fall short of current market expectations. This is why we have brought forward the timing of our interim results announcement this year.

We now have a total of 336 Hobby stores. Although 2005/6 is proving to be a difficult trading year for the Group, we remain confident that we will re-establish our sales growth by continuing to open new stores and by ensuring that our in-store activity of introductory gaming, painting lessons and other structured Hobby events is well delivered.

Games Workshop is a tightly run, well invested business. Our overheads continue to be reduced and, having come to the end of our factory investment programme, our investment efforts going forwards will be in new Hobby stores and in ensuring that our sales staff receive good training. We are moving from a period of investment in our supply infrastructure assets to a period of investment in the training of our people.

Whilst recognising that at present our levels of trading are below last year, the directors firmly believe that the prospects for the business remain very good."
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